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Matthew Yglesias Says That Russ Roberts Is Insane

Matthew Yglesias reads Russ Roberts:

Russ Roberts: The evidence for the Keynesian worldview is very mixed. Most economists come down in favor or against it because of their prior ideological beliefs. Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews…

And comments:

Keynesianism And Big Government: That seems insane to me. Did George W Bush sign a 100 percent tax cuts stimulus bill in 2008 because he favored bigger government? That doesn’t sound right to me. I think he did a 100 percent tax cuts stimulus because congressional Democrats were pushing for stimulus, because many of his advisers believed in New Keynesian economic models, and because he doesn’t favor bigger government. Or consider this. In the late 1990s, the Keynesian thing to do was to run budget surpluses. Right-wing critics of the Clinton administration disagreed with this, preferring to expend the surpluses on tax cuts. Left-wing critics of the Clinton administration also disagreed with this, preferring to expend the surpluses on new programs. Either way, whether or not one believed the country should be following the Keynesian prescription of budget surpluses had nothing to do with beliefs about big or small government…

Indeed. Milton Friedman's teacher Jacob Viner certainly did not want a bigger government. But in 1933 Jacob Viner and a whole bunch of other small-government loving economists argued for fighting the Great Depression with what we would now call "Keynesian" policies: a temporary money-financed increase in the deficit.

Viner advocated this because he was, at bottom, not an ideologue but a technocrat.

Similarly, in the counterfactual universe in which expansions in government purchases lead to sharp increases in interest rates even when the unemployment rate is high, Alternative Krugman calls not for expansionary fiscal policy but rather for policies to summon the confidence fairy.